A proposed bill that would repeal the individual mandate and employer mandate of the Patient Protection and Affordable Care Act (ACA) could reduce deficits by approximately $130 billion between 2016 and 2025, according to a recent cost estimate by the Congressional Budget Office (CBO). H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act, would also repeal federal excise taxes on the sale of medical devices, as well as the ACA’s Cadillac tax. The CBO and the Joint Committee on Taxation (JCT) estimate that, including macroeconomic feedback, the legislation would increase net direct spending and on-budget deficits by over $5 billion in at least one of the four consecutive 10-year periods following 2026.

Employer and individual concerns. The bill would repeal section 1511 of the ACA, which requires large employers to automatically enroll new employees in health care coverage, as well as automatically re-enroll current employees. This requirement is not currently being enforced, as the Department of Labor (DOL) is not requiring compliance until implementing regulations have been issued. The net budgetary savings for repealing this requirement CBO estimates, is $7.9 billion.

The proposed bill would also repeal the ACA’s individual mandate (section 1501) and employer mandate (section 1513). The individual mandate penalizes those who do not maintain health insurance coverage, with some exceptions. Although repealing the individual mandate would cause an estimated loss of $43.3 billion in penalty payments, the CBO and JCT estimate that the savings to the federal government stemming from lower enrollment would exceed the loss in revenues. The agencies similarly project that although repealing the requirement for large employers to offer health insurance coverage would reduce revenues by $166.9 billion, there would be similarly offsetting budgetary effects. Repealing both mandates would ultimately result in an estimated net budgetary savings of $147.1 billion.

Tax provisions. Section 9009 of the ACA created a 2.3 percent excise tax on the sale of medical devices. The JCT estimates that repealing this tax would reduce revenues and therefore increase the deficit by about $23.9 billion. The ACA’s “Cadillac tax,” found at section 9001, taxes high-cost employment based health plans. This excise tax will equal 40 percent of the difference between the applicable threshold and the value of the contributions. Repealing this tax could increase the deficit by an estimated net $91.1 billion.